The number of bankruptcy filings on the Mississippi Gulf Coast increased by almost 21 percent last year as local businesses struggle to survive the economic slowdown. There were 6,910 bankruptcies filed during 2001, up from the 5,713 filed in 2000, according to bankruptcy court records.
There was a big jump in Chapter 11 bankruptcies in 2001. Last year, there were 65 cases filed, compared to 12 in 2000. In a Chapter 11, a company is freed from the threat of creditors' lawsuits while it reorganizes its finances. The increase can be attributed to Friede Goldman Halter, which filed for bankruptcy in April. The bankruptcy involved nearly 30 separate FGH entities. Each type of bankruptcy showed an increase except for Chapter 13 ``wage earner'' bankruptcies, which were down slightly from the previous year. In Chapter 13, called the ``wage earner'' bankruptcy, an individual reorganizes debts to repay creditors. There were 4,884 Chapter 7 bankruptcies in the Biloxi district, which represent only one portion of the filings for the Southern District of Mississippi. The other divisions are in Jackson, Meridian, Natchez, Hattiesburg and Laurel. Chapter 7 bankruptcies increased 37 percent over the number filed in 2000.
In a Chapter 7, an individual or business liquidates assets to repay debt. ``I think a significant part of it was concern over the new bankruptcy-reform act that appeared to be imminent,'' Gulfport bankruptcy lawyer William Wessler said. ``There were a lot of people that have been thinking about it and thought, 'I'd better go ahead and file,''' he said. The bankruptcy reform act would have, among other things, made it more difficult to file under Chapter 7. It was passed by the House and Senate last spring, but in slightly different versions.